Strong Dollar Heightens Pressure on Global Metal Markets

Tashkent, Uzbekistan (UzDaily.uz) — The strengthening of the US dollar and widespread expectations of further monetary policy tightening by the Federal Reserve are putting significant pressure on global precious and industrial metal markets, according to an assessment shared by Alpari analyst Anna Bodrova.

According to her, the metals market concluded June on a downward trend following the publication of robust macroeconomic statistics from the United States. This data has reinforced investor confidence that the Federal Reserve's interest rate hike cycle has not yet reached its completion.

An additional layer of market uncertainty stems from ongoing negotiations between the United States and Iran, which directly affect the geopolitical situation surrounding the critical Strait of Hormuz.

The expert points out that gold is currently trading below the US$4,000 per ounce threshold, marking its lowest valuation in nearly eight months. Silver is maintaining a position slightly above US$58 per ounce, remaining close to its own seven-month lows. This downward pressure on precious metals is primarily driven by the resilience of the American economy and a highly robust labor market. Specifically, recent JOLTS (Job Openings and Labor Turnover Survey) data revealed the highest number of job openings in nearly two years, bolstering expectations for a Federal Reserve rate hike as early as this autumn.

Industrial metals are facing similar headwinds. Copper prices dropped below US$6.1 per pound amid anticipation surrounding an upcoming decision by the US Department of Commerce regarding the potential implementation of import tariffs on refined copper. Furthermore, mounting fears of a global economic slowdown and subsequent reduction in raw material demand are intensified by expectations of a more restrictive monetary policy environment.

Nevertheless, Anna Bodrova maintains that the long-term outlook for copper remains structurally positive. This resilience is supported by the rapid evolution of artificial intelligence technologies, ongoing modernization of energy infrastructure, rising global defense expenditures, and the continuous expansion of electric vehicle manufacturing.

Aluminum, following a substantial rally in early June, continues to experience a corrective pullback, trading around US$3,160 per ton—a drop of approximately 16% from its recent peak. The analyst attributes this decline to easing anxieties over potential supply disruptions through the Strait of Hormuz, alongside the strengthening dollar and forecasts of subdued industrial activity in China, the world's largest consumer of aluminum.

Platinum has fallen below US$1,580 per ounce, hitting a seven-month low, while palladium is holding steady near US$1,230 per ounce. Both metals are being restricted by the strong dollar and the prospect of elevated borrowing costs in the US. For palladium, a distinct long-term risk factor is the gradual contraction of demand within the traditional automotive industry as electric vehicle adoption accelerates.

According to Bodrova's analysis, while market participants focused intensely on Middle Eastern geopolitical risks just a few weeks ago, the key drivers for commodity markets have shifted decisively back to US macroeconomic statistics and policy signals from the Federal Reserve. Moving forward, interest rate expectations and the trajectory of the dollar are expected to dictate metal price movements in the coming weeks.